9 steps to hiring in California

Before you can start onboarding new hires, California employers may need to take several steps to support fair hiring, given the state’s unique legal obligations. Consider also checking local guidelines and reputable state resources for further information.

1. Get your business registration in order

Your small business may need to register as an employer with both federal and state agencies. The first step typically involves applying for a federal employer identification number (FEIN) from the Internal Revenue Service (IRS), which you can do using ; Form SS-4. A FEIN is like a Social Security number (SSN) for your business and is used for federal taxes.

If you have one or more employees in California, you may need to register for a California employer account number from the Employment Development Department (EDD). The EDD requires registration within 15 days of paying over $100 in wages in a calendar quarter. Employers use this identification number to report and pay state payroll taxes, including unemployment insurance and state disability insurance.

2. Understand key California labor laws

California’s labor laws help protect employees in the following areas:

• Wages and hours: As of January 2025, the minimum wage in California is $16.50 per hour for all employers. Many cities have higher local minimum wages, and you must pay the higher rate. For example, Emeryville’s minimum wage is over $3 more at $19.90.
• Leave policies: California has several mandated leave laws. State law requires employers to provide paid sick leave. Other laws include the California Family Rights Act (CFRA), which provides job-protected, generally unpaid leave for eligible employees, and paid family leave, a wage-replacement benefit program that doesn’t provide job protection.
• Workplace safety: California employers must follow regulations set by the state’s Division of Occupational Safety and Health (Cal/OSHA). These include maintaining a safe work environment and having a written injury and illness prevention program.
• Anti-discrimination laws: The California Fair Employment and Housing Act prohibits discrimination based on protected categories like race, gender, age, national origin and sexual orientation.

3. Write a compliant and competitive job description

When you’re ready to hire, a well-written job description can help you attract top talent. You can check job boards to see how competitors advertise similar positions.

Your job description can include all the required information, including the hard and soft skills beneficial for the role. Under California’s pay transparency law, employers with 15 or more employees are required to include the salary range in their job postings. You can research competitive pay and potentially list additional perks for your benefits package to attract top talent.

When you’re ready to post your job, it’s generally best to choose a clear, interesting job title. For example, you might use a title such as Staff Happiness Director for your Human Resources (HR) Director position. If you use an informal job title, ensure the position’s responsibilities are clear to attract the appropriate job seekers.

4. Conduct fair interviews and screenings

Once you receive applications, you can assess your candidates by screening applications for the minimum job requirements. For example, your marketing manager position may require experience using customer relationship management (CRM) software. You might search for this proficiency manually or with applicant tracking software (ATS).

When interviewing, try to ask questions that directly relate to the job and encourage inclusivity. For example, you can ask if a candidate can perform the essential functions of the job or inquire about their transferable skills. This acknowledges that a candidate may lack prior experience but could still be a good addition to the team.

While background checks are common in certain industries, such as healthcare or law enforcement, California’s Fair Chance Act restricts when and how to ask about a candidate’s criminal history. For example, employers typically can’t inquire about criminal records on an application or during an initial interview until they’ve made a conditional offer.

5. Classify your workers correctly

In California, you need to classify your workers as employees or independent contractors, and misclassifying an employee as an independent contractor can lead to significant penalties.

California uses a strict “ABC test” to determine worker status. To be classified as an independent contractor, a worker must meet all three of the following conditions:

• (A) The worker is free from the control and direction of the hiring entity.
• (B) The worker performs work that is outside the usual course of the hiring entity’s business.
• (C) The worker is customarily engaged in an independently established trade or business.

If a worker doesn’t meet all three criteria, they’re generally considered an employee.

6. Complete new hire paperwork

When you onboard a new employee in California, you and the new employee must complete several forms.

• Form I-9, Employment Eligibility Verification: This federal form confirms an employee can legally work in the US. The new employee must complete Section 1 by their first day. You must complete Section 2 within three business days.
• Form W-4, Employee’s Withholding Certificate: This federal form tells you how much federal income tax to withhold from the employee’s paycheck.
• Form DE 4, Employee’s Withholding Allowance Certificate: This is California’s state version of the W-4. It determines how much state income tax to withhold.

You might use a new hire onboarding checklist to make sure you collect all the required information.

7. Report your new hire to the state

As a California employer, you must report all newly hired employees and rehires to the New Employee Registry (NER) within 20 days of their start-of-work date. This is a legal requirement used to help enforce child support orders.

You can submit this information online or by mail using Form DE 34 as part of the hire reporting program. You need your California employer payroll tax account number and information about the employee, including their full name, SSN, address and employment date.

8. Set up payroll and get insurance

Once you hire employees, you need to pay them and manage payroll taxes. This includes withholding federal and state income taxes, social security and Medicare.

You’re also required to have workers’ compensation insurance in California. Coverage must be in place as soon as an employee starts work. It provides benefits to employees who get injured or sick from their job.

You’ll need to file several tax forms with the IRS, including:

• Form 941, Employer’s Quarterly Federal Tax Return
• Form 940, Employer’s Annual Federal Unemployment Tax Return

9. Post required workplace notices

California law requires employers to display posters in the workplace to inform employees of their rights. These posters must be placed where employees can easily review them. You can find the full list of required posters on the California Department of Industrial Relations (DIR) website.

Continue learning about California regulations

Each time you onboard a new employee, it can be helpful to double-check state and federal laws to comply with the latest regulations. Maintaining an up-to-date employee handbook can help you clearly communicate workplace policies and employee benefits, comply with legal obligations and create a fair and positive work environment.